A member of Russia’s ruling party proposed a law that would allow the seizure of foreign states’ assets in the country after the U.S. and its allies targeted President Vladimir Putin’s inner circle including a childhood friend with asset freezes and travel bans.

The draft seeks to benefit citizens or companies that had property outside Russia seized under an “unlawful” judgment from a foreign court, according to the State Duma’s website.

The government would use budget funds to compensate the victim, and the courts would have the right to go after foreign states’ assets in Russia, including property under diplomatic immunity, according to the proposal.

The EU and U.S. have targeted individuals, companies and the finance, energy and defense industries to punish Russia for the annexation of Crimea in March, while accusing Putin of supporting a separatist insurgency in eastern Ukraine. Italy froze about 28 million euros ($36 million) of properties belonging to billionaire Arkady Rotenberg for his ties to Putin. The Kremlin denies arming or financing the rebels.

If the confrontation escalates, “we could see embassies targeted, but I don’t think they’ll go after assets and property” belonging to businesses, Oleg Kouzmin, an economist at Renaissance Capital in Moscow and a former monetary policy adviser at Russia’s central bank, said by mobile. “It’s all about geopolitics and I think it’s actually unlikely to happen.”

Not retaliating

Russian stocks and the ruble fell for the first time in three days in Moscow. The benchmark Micex Index (INDEXCF) declined 0.4 percent to 1,436.05 at the close, and the Russian currency weakened 0.9 percent to 38.4925 per dollar as of 6 p.m.

Russia will use state funds to aid businesses hit by sanctions and isn’t considering retaliating further, Prime Minister Dmitry Medvedev said in an interview with state television channel Rossiya 24 on Sept. 20. The government is holding off discussing another round of tit-for-tat measures, he said, after Russia banned some food imports from the U.S., the EU, Norway, Canada and Australia last month before the latest wave of restrictions.

The U.S. is Russia’s fourth biggest trading partner, with about $43.8 billion flowing between the nations last year, according to data compiled by Bloomberg.

Boeing Co. (BA) delivered seven jets to Russian buyers in 2013, a year when U.S. exports of planes, aircraft engines and parts to the country topped $1.94 billion, Census Bureau data show. McDonald’s Corp. (MCD) had about 400 restaurants in Russia at the end of 2013. PepsiCo Inc. (PEP) last year reported Russia revenue of $4.9 billion from products such a soda, yogurt and potato chips in flavors such as crab and caviar.

Alcoa, Exxon Mobil

Alcoa Inc. (AA), the largest U.S. aluminum maker, has two plants in Russia -- in the southern cities of Samara and Belaya Kalitva -- that make extrusions and can stock for beverage containers, according to its website. The New York-based company generated $683 million in sales in the region in its latest year.

Exxon Mobil Corp. (XOM) pumps oil and natural gas from Russia’s rich fields. Some of the biggest assets owned by Western energy companies in Russia are connected to the Sakhalin oil and gas developments located off the Northeastern coast of Sakhalin Island in the Russian Far East. Irving, Texas-based Exxon owns 30 percent of the Sakhalin-1 project.

Putin’s spokesman, Dmitry Peskov, declined to comment on the proposed law today. “We consider these sanctions to be absolutely groundless and illegal and Russia naturally has the right to take steps to defend its interests,” he said by phone.

‘Charming story’

The draft, submitted Sept. 23 by Vladimir Ponevezhsky, a lawmaker from Russia’s ruling party, is scheduled for consideration by committee in the lower house of parliament, or State Duma, on Sept. 29. It may be heard by the chamber on Oct. 7. It would have to pass three readings in the Duma.

“It’s a charming story,” Boris Nemtsov, a deputy prime minister under former President Boris Yeltsin and now a member of the opposition, said on his Facebook page. “As they cut spending on health and education, it looks amazing, the desire to use the budget to help a billionaire like Rotenberg, whose villas in Italy were seized.”